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Case Study: Employee Competencies

Heres a sample case study on employee competencies that was used with Human Resource (HR) and Training Education
Managers to help them understand the implication of employee competencies. It was used to help clarify concepts after a
presentation on the background of competencies, and how organizations are using them to help position themselves to
reach their strategic goals.
Case Background: This case is designed to provide some clarification on the role of competencies, and provide the
opportunity to share learning and insights with each other.
Case: You are the Organizational and Employee Development Manager for Southern, a well known furniture retailer.
Starting as a one store, small town based operation in the late 1800s, Southern evolved into a 200 store chain in the early
90s, with stores located throughout the Mid to Upper South. The key to Southerns success occurred as a result of key
marketing strategies that: 1) put stores in areas of high growth; and 2) employed certain core business competencies. In
Southerns case, it was the combination of the ability to combine an expertise in interior decorating with sale of high end
furniture. This clearly distinguished Southern from its competition, which relied mostly on walk in customer trade and
retail sales without regard to real customer need. Southern, on the other hand, was quick to send someone to your house
to help with your selection of furniture that fit with your interior decorating needs.
Southern relied heavily on their Store Managers to ensure a consistency of application of the core competencies in each of
the locations. For the Store Manager, the traditional way of distinguishing good performance was someone who ran the
store according to policy, made sure it was well stocked, that competent retail sales people and interior decorating reps
were hired and trained, and that the weekly store advertising was correct and placed in the appropriate newspapers.
In the last several years, however, things are changing rapidly. There has been a marked slowdown in housing
construction in many of Southerns major markets. Whats more, customer tastes and preferences seemed to have
changed. Faced with new opportunities for buyingcatalogues, TV, Electronic Shopping Malls, etc.and new economic
pressures and uncertainty, the customers just dont seem to be the same. Sales volume and margins have slipped
significantly as of late.
Knowing this, Southerns CEO senses the need for significant change. "Weve got to become more competitive, more
strategic," he maintains. "We need to rediscover our customers, and meet their needs in todays market".
Recently, the CEO and the Director of Human Resources attended a conference on positioning the organization for
change. One of the topics that got them the most excited, and at the same time the most confused, was on employee
competencies. Coming back from the conference, the Director of Human Resources calls you in and says, "I need to
understand the implication of all this employee competency stuff, and how it can help us become more competitive. Take
a stab at it and let me know what you come up with by the end of the week."
Exercise:
Using the above as background and learnings from the background presentation on competencies, come up with a
plan for how to deal with this problem. Consider such issues as:
Are competencies relevant?
What value could they add in helping position Southerns employees for success?
What is the link with the principal business challenges?
Consider the Store Managers position and the challenges they face. What are some general competencies that might
apply in the new environment? How do they contrast with the traditional competencies needed for superior
performance?
What key learnings can you see that can be used in your own organizations, and the changes they face?
Prepare a short report back to share what youve done, and insights youve gleaned with the larger group.


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Case: The Fall of Quest
1997 was a banner year for Quest Computer Corporation, a leading manufacturer of personal computers. The company
surpassed $15 billion in sales, nearly seven times its revenues in 1992, the year John Clarke took over as CEO.
Clarke is a hard-driving, no-nonsense leader. His vision was to create a $30 billion enterprise by the year 2000, but things were
slowly started to crumble around him. What once had been an open and productive atmosphere that cultured teamwork, was
now deteriorating under the strains of political infighting, cronyism, and allegations of sexual harassment.
In the eye of the storm was Samuel Anderson, vice president of human resources. Anderson and Clarke worked together in the
eighties at another corporation before Clarke came to Quest in 1992. Three years later Anderson followed. Anderson
immediately started using his relationship with Clarke to influence business decisions. Anderson also leveraged his ties to
discreetly resolve two allegations of sexual harassment against him.
Although the majority of senior executives and managers believed Clarke was an extremely tenacious and good executive, they
also believed he was getting bad advice and accepting it. Clarke, when asked about the sexual harassment complaints against
Anderson, replied, People make things up. There is no way of knowing. People spread rumors. This and other incidents
further strained relations between Clarke and the rest of the senior executive team. Busy with the task of running one of the
world's leading PC manufacturing organizations, Clarke began relying heavily on three senior executives Anderson, Senior
Vice President Tim Hunt, and Chief Financial Officer Barry Lynn.
The rest of the team felt increasingly alienated. Over a three-year period, starting in 1996, 10 top executives left the company and
following them were several essential managers and supervisors. At the center of this exodus was the bizarre dynamics between
Clarke and Anderson. Many believed that Clarke empowered Anderson to do things way beyond his role in human resources.
For example, Anderson had significant influence on changing the organizational structure of the company, determining what
divisions ought to sell into what markets, and which products should be sold through various departments. He also took steps
to drive a wedge between senior executives, strengthening his position with Clarke while inducing a communications
breakdown throughout the organization. Anderson had a list of people whom he would constantly campaign against by
advocating organizational changes to lower their profile. Once he lowered their profile, he would start a process of easing them
out of the door. As one executive put it, Anderson was instrumental in deciding which people to bring in and which were no
longer acceptable in the company.
Clarke's reliance on Anderson baffled, and angered, other executives. Anderson was very close to Clarke, and he had a huge
impact on the business. Human resource professionals usually do not play that kind of a role, as they are supposed to try to
bring the team together, but all anyone saw Anderson doing was creating divisiveness. Instead of working together to fine-tune
a coherent growth strategy, Quest's senior executive team became disjointed and increasingly detached from the rest of the
company. Their inability to lead soon had an effect on the morale of almost every employee within the company.
Two of Anderson's initiatives drove home the point of an executive team that was out of touch with its workers. The first
initiative was the building of a multimillion-dollar on-campus cafeteria that included reserved underground parking for senior
executives. Prior to that, executives shared parking space with the rest of the company's employees. The second initiative was
the increased security on the eighth floor of the corporate building. Here the executives and several key managers had their
offices; even though every other executive objected to the idea by arguing that it created a hierarchical environment not
conducive to a free exchange of ideas with subordinates.
Anderson was at the center of almost every bit of chaos that existed within the company. Clarke denied that Anderson had
undue influence. Every executive has the same access to me, Clarke said. He continued, I have always had an across-the-
board relationship with everybody. I always maintained a high degree of equality. There was no favoritism. Clarke also
maintains that Anderson had very good relations with just about everybody. Anyone who says otherwise, Clarke added,
must have an ax to grind. Many former executives said they were reluctant to complain to Clarke about Anderson because
Clarke took personal offense, as if he were being criticized, and because they feared winding up on Anderson's list.
The erosion of the executive team came at a very bad time. Its main competitor was starting to grab big chunks of PC market
share by proving the viability of the direct-sales model. When Clarke replaced the former CEO in 1992, his aggressive price-
cutting initiatives reversed Quest's direction and led the company to the top of the PC market. But now, Clarke was much less
decisive. As one former executive noted, He was paralyzed by the speed with which the market was changing, and he couldn't
make the difficult decisions. Clarke failed to see the opportunity of the web. Its main rival was now selling over $2 million
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worth of products per day over the Web. In 1998, its rival surpassed Quest in desktop PC sales to U.S. businesses for the first
time.
The high turnover in the sales divisions led to instability that caused several high-profile corporate accounts to take their
business elsewhere. As people left, the performance of the company started to degrade. Quest attempted to construct its own
build-to-order strategy by purchasing a rival company. This failed as it had no vision to guide its direction.
Finally, things came to a head. Quest could not significantly reduce distribution and manufacturing costs or boost PC revenues.
Huge oversupplies of inventory adversely affected Quest. While its main competitors grew at about 55 percent from the first
quarter of last year to the first quarter of this year, Quest's business fell by 11 percent over the same period. By the end of this
year's first quarter, Quest's stock lost almost half its value, and the company's first-quarter earnings fell far short of analysts'
estimates.
Then came the kicker, the forced resignations of both Clarke and Anderson. The new CEO, Paula White, now has the massive
job of turning a lot of infighting rank and file into a cohesive organization. The leadership structure was severely damaged due
to the large number of people leaving Quest. Although a large number of replacements were found, it is extremely hard to
replace the collective experience of that many people leaving in such a short time. To help rebuild the leadership structure,
Paula White has charged the interim human resource vice president, Samuel Wines, with rebuilding the leadership structure.
Samuel created a special leadership task force team by hiring several new human resource specialists. You were brought on as a
training analyst to be a part of that team.
Discussion - Competencies
The team's first decision is a long-term strategy of implementing a competency based performance appraisal system.
1. What are competencies and how are they related to performance?
2. How do Skills, Knowledge, and Attitudes (SKA) fit into competencies?
3. What is leadership and how do competencies fit in with it?
4. What are the differences between job based performance models and competency based performance models?
5. How can implementing a competency based performance model help Quest?
6. If a competency based performance model was implemented years earlier at Quest, do you think it would have
prevented its present troubles? Why?
7. What are the three key leadership competencies that you believe are most important for Quest's leaders to have in order
to ensure its survival?
Discussion - Building the Competency Model
1. What methods could you use to determine the required competencies?
2. How could you validate your competency model?
3. How can you help to ensure the competency model will be accepted by all the members of Quest?
4. Who do think will be most resistant to the implementation of a competency model at Quest - the executives, upper
management, middle management, supervisors, or the workers? Why? Who might be the least resistant?
Discussion - Building the Leadership Appraisal Model
1. How and why should you trial the leadership appraisal model?
2. What pitfalls do you think the leaders at Quest might be most susceptible to when performing an evaluation?
3. How can you help them to perform the performance appraisal correctly once it is implemented?
Discussion - Other Topics
1. What are some short term human resource strategies that can be implemented to help Quest become more competitive?
2. What role should the human resource department perform in an organization? Why did the last regime go out of
bounds?
3. How can you help the departments' managers to determine when they are meddling in other departments affairs, and
when they are actually helping other departments?
4. How do you approach an executive who you believe is not performing in the best interest of the organization?
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A n s w e r G u i d e f o r A c t i v i t y 7 - C a s e S t u d y 2 - T h e F a l l o f Q u e s t
Discussion - Competencies
1. What are competencies and how are they related to performance? Having the required competencies means that
a person is qualified to perform a task or job. This in turn means that it will be performed to the best interest of
the organization. That is, the person will help the organization to excel by his or her performance. It does not
necessarily mean it will be performed to set standards as the standards might have been arbitrarily built by
someone with less knowledge of what the job requires.
2. How do Skills, Knowledge, and Attitudes (SKA) fit into competencies? In order to have a competency, you
must first have the skill and/or knowledge that allows you to perform. Having the proper attitude or desire will
then allow you to excel at that task performance.
3. What is leadership and how do competencies fit in with it? Although there are many definitions of leadership,
almost all of them have two things in common: 1) having a vision to aspire to 2) having a certain charismatic (or
traits) that inspires others to follow that leader. The leader must also have a set of competencies, which are
different for each organization and position, that helps to build trust among the leaders followers and other
leaders.
4. What are the differences between job based performance models and competency based performance
models? In job based performance models, the standards are built and then the jobholder must meet these
standards. In a competency driven organization, the standards are based on jobholders who have been identified
as good performers.
5. How can implementing a competency based performance model help Quest? By first identify the great leaders,
and then building a model based on them for the other leaders to follow. In areas where they fall short,
development and training programs should be built to help them achieve the model's required competencies.
6. If a competency based performance model was implemented years earlier at Quest, do you think it would
have prevented its present troubles? Why? My best guess is that no, it would not of helped. Normally, leaders
who are this high up on the hierarchy would not be held as accountable for a competency based performance
system as they would have already been deemed to have the necessary competencies. But, by implementing one
now will help to build the future leaders and inspire trust back into the system.
7. What are the three key leadership competencies that you believe are most important for Quest's leaders to
have in order to ensure its survival? This is open for debate, but I would pick:
o Building visions and trust inspiring others to follow them.
o Fostering conflict resolutions building win/win resolutions.
o Decision making being able to make the HARD choices.
Discussion - Building the Competency Model
1. What methods could you use to determine the required competencies? What method do you think would
work best for quest? See "Building the Leadership Competency Model."
2. How could you validate your competency model? See "Building the Leadership Competency Model."
3. How can you help to ensure the competency model will be accepted by all the members of Quest? By getting
them involved people accept what they build and challenge what is forced upon them.
4. Who do think will be most resistant to the implementation of a competency model at Quest - the executives,
upper management, middle management, supervisors, or the workers? Why? Who might be the least resistant?
This is open for debate but I would say that the executives and upper management would be least resistant as
they know they need to repair the damage. The lower levels would be the most resistant as their trust has been
violated by their leaders.
Discussion - Building the Leadership Appraisal Model
1. How and why should you trial the leadership appraisal model? Any of the discussed methods can be used to
validate it. It needs to be validated to ensue the model is correct.
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2. What pitfalls do you think the leaders at Quest might be most susceptible to when performing an
evaluation? Open for debate, however they will want to rush it as they believe they need to accomplish
something and they will want to model it after themselves (many leaders are very egotistical its how they got
there in the first place).
3. How can you help them to perform the performance appraisal correctly once it is implemented? By ensuring
they are trained to so and then coaching them throughout the process.
Discussion - Other Topics
1. What are some short term human resource strategies that can be implemented to help Quest become more
competitive? Having discussions between the workers and top leadership (getting a dialog going), implementing
development and educational programs to increase the quality of leadership within all ranks, teach
managementbywalkingaround to top management in order to help develop trust, etc.
2. What role should the human resource department perform in an organization? Why did the last regime go out
of bounds? Most human resource departments walk a fine line they are charged with growing and guarding
the organization's workers of all ranks which means they need to look out for the organization's best interest. Yet,
by growing and guarding the individuals, they take on the responsibility of also looking out for these individuals'
best interest... so who come first the organization or the individuals? The last regime went out of bounds
because they looked after their interest first instead of their people and the organizations'.
3. How can you help the departments' managers to determine when they are meddling in other departments
affairs, and when they are actually helping other departments? One way is by helping to create a healthy dialog
and fostering win/win relationships.
4. How do you approach an executive who you believe is not performing in the best interest of the
organization? One way is by being honest and forthcoming. Another method is to approach another leader who
is on close terms with the executive.